HOUSTON, TX--(Marketwired - November 09, 2015) - Vantage Drilling Company ("Vantage" or the "Company") (OTC PINK: VTGDF) reports a net loss for the three months ended September 30, 2015 of $52.4 million or ($.17) per diluted share as compared to a net loss of $5.6 million or ($.02) per diluted share for the three months ended September 30, 2014.
Our results for the three months ended September 30, 2015 include several significant items that had a material impact on our financial results. Each of these items and the future outlook for our Company are more fully discussed in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) and is available on our website and the SEC website. The significant items included in the net loss for the three months ended September 30, 2015 and 2014, include -
Titanium Explorer. Our customer for the Titanium Explorer operating in the United States Gulf of Mexico sent us a notice of termination of the Agreement for the Provision of Services Contract for the Titanium Explorer on August 31, 2015 effective upon completion of operation on the current well. We completed the well in early September and demobilized the rig. We believe the termination of the contract was wrongful and commenced arbitration proceedings on August 31, 2015 to recover damages, including loss of future revenues and expenses, in connection with the wrongful termination of the contract. In connection with the cancellation of the contract, we recognized $21.5 million of deferred mobilization revenue.
Cobalt Explorer. On August 13, 2015, we terminated the contract for the construction of the Cobalt Explorer with the shipyard pursuant to the terms of the contract. In connection with the termination of this contract, we expensed approximately $31.2 million of development costs and interest previously capitalized to the Cobalt Explorer. During the three months ended September 30, 2015, we capitalized $792,000 of interest prior to the cancellation of the project. During the three months ended September 30, 2014 we capitalized $1.3 million to the Cobalt Explorer.
Gain on Retirement of Debt. During the three month periods ended September 30, 2015 and 2014, we recognized gains on the early retirement of debt of approximately $12.7 million and $1.1 million, respectively.
Restructuring Costs. In response to current market conditions, we reduced operating costs and capital expenditures for our rig fleet. During the three months ended September 30, 2015, we recognized a restructuring charge of approximately $2.5 million consisting primarily of severance costs associated with our reduction in support personnel.
Income Tax Provision. Our income taxes are generally dependent upon the results of our operations and when we generate significant revenues in jurisdictions where the income tax liability is based on gross revenues or asset values, there is no correlation to the operating results and the income tax expense. Furthermore, we are required to report our income tax provision based on our estimated annual effective tax rate applied to the year to date period. Any adjustment to our estimated annual effective tax rate will result in a catch-up adjustment for the earlier reported interim periods. Due to the cancellation of the Titanium Explorer contract, we have significantly reduced our forecasted operating results for the remainder of 2015 which has significantly impacted our estimated annual effective tax rate. This resulted in an adjustment to our income tax provision of approximately $52.4 million recognized during the three months ended September 30, 2015.
We will not be holding a conference call to discuss our results for the three month period ended September 30, 2015.
Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with an owned fleet of three ultra-deepwater drillships; the Platinum Explorer, the Titanium Explorer and the Tungsten Explorer, as well as four Baker Marine Pacific Class 375 ultra-premium jackup drilling rigs. Vantage's primary business is to contract drilling units, related equipment and work crews primarily on a dayrate basis to drill oil and natural gas wells. Vantage also provides construction supervision services for, and will operate and manage, drilling units owned by others. Through its fleet of seven owned drilling units, Vantage is a provider of offshore contract drilling services globally to major, national and large independent oil and natural gas companies.
The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in the company's filings with the Securities and Exchange Commission. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements.
Vantage Drilling Company
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Revenue
Contract drilling services $ 197,133 $ 189,648 $ 608,002 $ 602,859
Management fees 1,923 1,923 5,706 12,474
Reimbursables 9,435 15,947 24,693 44,368
--------- --------- --------- ---------
Total revenue 208,491 207,518 638,401 659,701
--------- --------- --------- ---------
Operating costs and expenses
Operating costs 94,420 111,271 285,777 310,995
General and administrative 10,682 9,980 27,613 26,461
Depreciation 31,764 31,639 95,168 94,894
Construction contract
cancellation costs 31,189 - 31,189 -
Restructuring costs 2,504 - 2,504 -
--------- --------- --------- ---------
Total operating costs and
expenses 170,559 152,890 442,251 432,350
--------- --------- --------- ---------
Income from operations 37,932 54,628 196,150 227,351
Other income (expense)
Interest income 22 14 33 38
Interest expense and other
financing charges (48,334) (53,376) (147,529) (162,149)
Gain (loss) on debt
extinguishment 12,732 1,051 38,954 (462)
Other, net 339 376 1,963 616
--------- --------- --------- ---------
Total other income (expense) (35,241) (51,935) (106,579) (161,957)
--------- --------- --------- ---------
Income before income taxes 2,691 2,693 89,571 65,394
Income tax provision 55,139 8,309 95,625 36,008
--------- --------- --------- ---------
Net income (loss) $ (52,448) $ (5,616) $ (6,054) $ 29,386
========= ========= ========= =========
Earnings (loss) per share
Basic $ (0.17) $ (0.02) $ (0.02) $ 0.10
Diluted $ (0.17) $ (0.02) $ (0.02) $ 0.10
Vantage Drilling Company
Supplemental Operating Data
(Unaudited, in thousands, except percentages)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2015 2014 2015 2014
-------- -------- -------- --------
Operating costs and expenses
Jackups $ 19,991 $ 24,400 $ 65,003 $ 70,561
Deepwater 60,229 63,413 177,174 170,456
Operations support 6,418 9,937 23,181 31,039
Reimbursables 7,782 13,521 20,419 38,939
-------- -------- -------- --------
$ 94,420 $111,271 $285,777 $310,995
-------- -------- -------- --------
Utilization
Jackups 72.0% 99.2% 81.0% 98.9%
Deepwater 86.8% 75.2% 92.8% 84.6%
Vantage Drilling Company
Consolidated Balance Sheet
(In thousands, except par value information)
September 30, December 31,
2015 2014
------------- -------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 223,984 $ 82,812
Trade receivables 102,057 153,428
Inventory 66,014 65,892
Prepaid expenses and other current assets 23,128 28,618
------------- -------------
Total current assets 415,183 330,750
------------- -------------
Property and equipment
Property and equipment 3,475,579 3,524,566
Accumulated depreciation (500,696) (406,674)
------------- -------------
Property and equipment, net 2,974,883 3,117,892
------------- -------------
Other assets
Investment in joint venture 981 1,318
Other assets 116,325 79,897
------------- -------------
Total other assets 117,306 81,215
------------- -------------
Total assets $ 3,507,372 $ 3,529,857
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 48,148 $ 59,139
Accrued liabilities 173,534 101,537
Current maturities of long-term debt, net of
discount of $738 and $1,181 77,754 95,378
------------- -------------
Total current liabilities 299,436 256,054
------------- -------------
Long-term debt, net of discount of $15,104 and
$25,875 and current maturities 2,614,126 2,632,802
Other long-term liabilities 40,579 85,327
Commitments and contingencies
Shareholders' equity
Preferred shares, $0.001 par value, 10,000
shares authorized; none issued or
outstanding - -
Ordinary shares, $0.001 par value, 500,000
shares authorized; 311,837 and 307,808
shares issued and outstanding 312 308
Additional paid-in capital 908,743 905,136
Accumulated deficit (355,824) (349,770)
------------- -------------
Total shareholders' equity 553,231 555,674
------------- -------------
Total liabilities and shareholders' equity $ 3,507,372 $ 3,529,857
============= =============
Vantage Drilling Company
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
--------------------
2015 2014
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (6,054) $ 29,386
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation expense 95,168 94,894
Amortization of debt financing costs 7,356 8,713
Construction contract cancellation costs 31,189 -
Accelerated deferred mobilization income (21,508) -
Amortization of debt discount 7,309 8,496
Non-cash (gain) loss on debt extinguishment (38,944) 462
Share-based compensation expense 5,020 6,540
Deferred income tax benefit (997) (184)
Equity in loss of joint venture 337 317
Loss on disposal of assets 370 558
Changes in operating assets and liabilities:
Restricted cash - 2,125
Trade receivables 51,371 (55,917)
Inventory (122) (8,681)
Prepaid expenses and other current assets 8,503 7,686
Other assets 13,917 6,660
Restructuring costs 2,504 -
Accounts payable (10,991) (7,267)
Accrued liabilities and other long-term liabilities 42,344 81,194
--------- ---------
Net cash provided by operating activities 186,772 174,982
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (41,409) (34,137)
Return of investment in joint venture - 23,250
--------- ---------
Net cash used in investing activities (41,409) (10,887)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt (154,191) (127,466)
Proceeds from (repayment of) revolving credit
agreement, net 150,000 (10,000)
--------- ---------
Net cash used in financing activities (4,191) (137,466)
--------- ---------
Net increase in cash and cash equivalents 141,172 26,629
Cash and cash equivalents-beginning of period 82,812 54,686
--------- ---------
Cash and cash equivalents-end of period $ 223,984 $ 81,315
========= =========
FOR FURTHER INFORMATION PLEASE CONTACT:
Public & Investor Relations Contact:
Paul A. Bragg
Chairman & Chief Executive Officer
Vantage Drilling Company
(281) 404-4700
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